Friday, November 16, 2012

Twinkies Maker Hostess Going Out of Business, CEO Blames Union Strike

Hostess, the makers of Twinkies, Ding Dongs, Cupcakes and Wonder Bread, is going out of business after striking workers failed to heed a Thursday deadline to return to work, the company said.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

Hostess Brands Inc. had earlier warned employees that it would file to unwind its business and sell off assets if plant operations didn't return to normal levels by 5 p.m. Thursday. In announcing its decision, Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

Hostess suspended bakery operations at all its factories and said its stores will remain open for several days to sell already-baked products.

The Irving, Texas-based company had already reached a contract agreement with its largest union, the International Brotherhood of Teamsters. But thousands of members in its second-biggest union went on strike late last week after rejecting in September a contract offer that cut wages and benefits. Officials for the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union say the company stopped contributing to workers' pensions last year.

NBC's Savannah Guthrie read a statement on "Today" from the bakers' union that said: “Despite Greg Rayburn’s insulting and disingenuous statements of the last several months, the truth is that Hostess workers and the union have absolutely no responsibility for the failure of this company. That responsibility rests squarely on the shoulders of the company’s decision makers.”

Rayburn responded that he had been “pretty straightforward in all the town hall meetings I’ve done at our plants to say that in this situation I think there is blame that goes around for everyone.”

He denied that the decision to shut down could be a last ditch negotiation tactic to get the union back to the table.

“It’s over,” he said. “This is it.”

Rayburn, who first joined Hostess earlier this year as a restructuring expert, had earlier said that many workers crossed picket lines this week to go back to work despite warnings by union leadership that they'd be fined.

"The problem is we don't have enough crossing those lines to maintain normal production," Rayburn told Fox Business.

Hostess said that production at about a dozen of the company's 33 plants had been seriously affected by the strike. Three plants were closed earlier this week.

The privately held company filed for Chapter 11 protection in January, its second trip through bankruptcy court in less than a decade. The company cited increasing pension and medical costs for employees as one of the drivers behind its latest filing. Hostess had argued that workers must make concessions for it to exit bankruptcy and improve its financial position.

The company, founded in 1930, was fighting battles beyond labor costs, however. Competition is increasing in the snack space and Americans are increasingly conscious about healthy eating. Hostess also makes Dolly Madison, Drake's and Nature's Pride snacks.

If the motion is granted, Hostess would begin closing operations as early as Tuesday.

"Most employees who lose their jobs should be eligible for government-provided unemployment benefits," Hostess said. Of course they will get government providing and guess who is going to pay that folks?? Us! The working tax payers.WARNING RANT AHEAD>>> What the freaking bloody hell is wrong with these people?!!!

Ahhh! They should be grateful and thankful to God that they had JOBS!! Do those morons have any idea how many desperate Americans would jump at the chance to have those jobs????!! They should have been glad they had a regular paycheck coming in and food on their table and a roof over their greedy little heads?!!! This really burns me up!! IDIOTS!! And because of THEM the tax payers have to pay for their unemployment benefits. ARGGHH...... :(Okay, nuff said, I am done.

It's pure union greed. I've seen it happen all over the place. Like two factories next door. One where there is a union, and it says no to adjustments to meet economic realities. Another that has no union to get in the way of qualified managers making these decisions.

And then you check back a few years later, the union plant is entirely gone. Being so brittle, thanks to the union, it completely broke.

Lib: I wouldn't call Stewart a traitor as you do. He tends to be hostile to basic American freedoms, and thinks that saying the F-word a lot makes him a great comedian. But traitor? No.

Nor do I blame the Papa John's guy for trying to find some way around the Obama administration clobbering his business and trying to force him to fire people.

Hundreds of thousands of workers will be fired from their jobs, have drastic cuts in benefits, or lose hours as a result of Obamacare. But you don't find this to be a problem at all do you?

As for your source, that being said, "MoveOn" is a hard left opinion site, not a news site at all. One should go there to find out how the hard left thinks, not to find out what is really going on. They do what you claim Fox News does.

How come, Lib, it is OK when MoveOn does it, and not when Fox does it?

dmarks, time to wave good-bye to union thugs. They aren't needed. I love your statement to Silver, lol!

Lib, why don't you take a real good look at your so-called president. His thugs and pals are behind all this. And Move-on.org are nothing but a bunch of liberals that despise the true American spirit of freedom and liberty.

Unions are greedy, selfish pigs. They aren't willing to compromise. It ticks me off that the Bakers union is forcing others out of work. If it wasn't for the Bakers union over 18,000 employees would still have jobs.

For your consideration, Leticia. Seems that Hostess had a Romney experience.

Hostess is owned by Ripplewood Holdings, a vulture capital firm, and two hedge funds, Silver Point Capital and Monarch Alternative Capital. As is typical for such parasites, they have loaded the company with debt and are slashing employment and benefits to maintain profits.

In order to accomplish that the vulture capitalists demanded (after previous union givebacks):

An immediate 8% wage reduction

The shift of at least 20% more health care costs onto its employees

Elimination of the employees’ W-1 (retiree medigap insurance)

Closure of additional plants (10-12), refusing to tell the union which plants are profitable, which plants will be closed, why, etc.

It's not consistent with my "lies" since I did not lie. But you lied in your title of this. You mentioned a "Romney experience". I looked in vain for any mention of Romney. There was none. You mentioned union givebacks, when in reality the union gave nothing (it was just that fewer handouts were given).

You are also overlooking the fact that since a union was involved. the company had given into unsustantainable demands. This had to be cut back to fair value compensation in order for the company to survive.

You overlook the fact that the union bled the company dry for years. After this, setting things right is not a problem at all.

Down like a simpering wimp? If I were a union thug, I'd have no right to, as I'd have been overpaid for the job and provided substandard work. I'd have still made out like a bandit.

Nothing obscures the fact that at Hostess the greed of the union thugs is destroying American jobs. It will probably result in something typical in so many sectors, including the auto industry: unions forcing the jobs out of the country.

I heard yesterday on NPR about how Obamacare places a $2000 penalty per employee hired, upon employees. The results of this can't be good.

It kicks on at 30 or more hours a week, the new "full time". Already businesses are cutting employee hours down to below this threshold... this is what Obamacare is encouraging them to do, to avoid this penalty.

If it keeps going like this, the outcry will be strong, and we will have major Democratic losses in the House and Senate in two years (some of this is expected anyway, as it usually happens during a a mid-term)

Hostess Blames Union For Bankruptcy After Tripling CEO’s PayBCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.http://thinkprogress.org/economy/2012/11/16/1203151/why-unions-dont-shoulder-the-blame-for-hostesss-downfall/"...It is quite clear that the company is stealing the money and hiding it in he executives pockets along with the Hedge Funds who own Hostess.

Let's do the math. 18,000 employees. The average yearly cost per employee with benefits is $50,000. I am high balling it just to see. That comes out to about 1 billion a year in wages and benefits. That leaves the company with 1.5 billion dollars! Their expenses are not more than 1.5 billion dollars! They are fabricating the books and the executives are pocketing serious money. In the hundreds of millions! Let the company burn! Period! Greg Rayburn is a liquidation specialist. They hired him a couple of months ago to liquidate the company. Don't get it twisted. Salary Increases at Hostess.

Also, Lib. You have presented no facts at all. Nothing from an actual journalistic site. "Think Progress" is a hard leftist opinion site, and is not any sort of news site. People only laugh at you for using them as any kind of source.

From Wikipedia: "ThinkProgress is an American political blog that "provide[s] a forum that advances progressive ideas and policies"

There, even the unbiased Wikipedia entry acknowledges that Think Progress is an issues advocacy blog. The Center that uses it as a newsletter is also described as being in it for advocacy. And not accuracy.

Perhaps that is why you are so confused about matters and claimed that Bain Capital was involved. You are so gullible.

However, Lib, I am glad you have listened to my suggestion to stop presenting these pieces as your own original writing.

"...ad hominum attacks..."

That is what you do. The rest of us stick to the facts.

So tell us, Lib, do you lie in bed crying at night how unfair the world is that Kent Magill, EVP, is good enough at what he does, enough to earn $375,000 to $656,256, and you, who wants to get ahead by begging for money instead of working for it, gets only a fraction of this?

You must cry a lot. You listed 10 of your betters and the money they make that is more than you make.

dmarks, I hadn't heard about that penalty! Unbelievable. I hope Obamacare truly blows up in that scum bags face. He deserves it. It's useless giving true facts, he won't listen.

Lib, you just can't seem to blame the Union can you? It's rather comical how it's always the owners or the wealthy person's fault. We are in a serious recession, and those people should have been thankful for their jobs. I know I am grateful for mine. I in no way want the government supporting me to sit on my lazy bum doing not a darn thing. I wonder if you would feel different if this was your company falling to pieces?

Lib, it is the union that cause the downfall. Those workers were given a deadline to come to a compromise and they refused, not to mention the thugs at the lines refusing workers to enter the plant. Tell, how is not their fault?? Some of those people wanted their jobs.

Leticia: Great point on the thugs and bullies(typically not working people having quit their jobs) harassing the real workers who want to enter the plant. Just proving that unions are at heart anti-worker. And against the middle class.

Obamacare discredits itsself with its outrageous penalties which punish employers for having employees.

This has nothing to do with the 'corporate right', Lib. But everything to do with workers' rights which you and unions oppose.

Leticia,You know one thing about this story that gets to me? How some anchors in the mainstream media are rejoicing that the demise of Hostess will help to bring under control two "epidemics": that of obesity and that of diabetes.

What tripe!

Those "addicted" to Twinkies will just find another source for their sugar fix: Dunkin Donuts, 7-11 pastries, etc.

Several factors contributed to the rising operating costs for Hostess, one of those factors being the rising cost of grains.

So, now 18,500 people are out of jobs and health insurance. Big victory for the union, huh? Pffffft.

So, the SEIU wants to do a work stoppage at one of the busiest airports, and on the busiest travel day of the year. Typically, we’d just look at this as yet another, “union goons screw up everyone’s holiday to get what they want.” But, there is more to it than meets the eye....

I rarely bought the things, but if I had known they were made in union plants, I would have never done so.

The "look for the union label" idea is good, but as a warning for products not to buy or support. If Hostess comes back, I'd make sure they came from a union-free plant before I considered buying them.

dmarks, thanks. I wonder if those workers, maybe could have asked for an police escort? Too late now, but it's still sad that they were prevented from working.

AOW, I have heard a few people say that. They were nice tasty snacks, and sorry that some people don't have self-control, and now look at the outcome. People out of work and awesome company shut down.

Ducky, I am not fan of Paula Dean, but she is trying to eat better. Granted, I would NEVER had tried any of her recipes, but the woman can cook. These are grown adults and should learn self-control and exercise. That's the whole problem. People eat crap and then sit on the couch. You can't do that! If you eat junk food, work it off!

I guess Little Debbie is about to become the popular snack food product of the states. I think I will just stick to my tootsie pops and my occasional dark chocolate candy.

When will the media start reporting that while Hostess was trying to cut bakers' pay by 8% and benefits by 32%, the CEO gave himself a 300% raise ($750,000 - $2,500,000) Nine executives received 60% to over 100% raises while fiing their 2nd bankruptcy. Meanwhile they stopped paying into the employee's pension owing over $160 million. But yes, blame the 18,000 workers making less than $20 an hour for Hostess closing, right?

Hostess To Pay $1.75 Million In Executive Bonuses After Blaming Unions For Bankruptcy